"Australian exporters to Malaysia will also be able to immediately enjoy significantly reduced tariffs for goods, reaching up to 99 per cent by 2020," he said at a signing ceremony with Mr Emerson.

The agreement also allows Malaysian investors to participate in Australian private hospital services including massage, homeopathy and traditional medicine.

Malaysia, meanwhile, has agreed to allow 100 per cent equity holdings by Australian entities in the Malaysian education and telecommunication sectors, and 70 per cent holdings in the Malaysian insurance and investment-banking sectors.

Farming impact

Malaysia is currently worth around $1 billion to Australia's agricultural exporters, and is the fourth largest buyer of Australian sugar and the fifth largest wheat buyer.

The National Farmers Federation (NFF) hopes the agreement will bring it closer to deals with bigger countries like China.

The NFF's Duncan Fraser says the deal shows a with China is possible.

"You can learn from that and how to go about forging agreements and dealing with some of the sensitive issues with agricultural products that have been a barrier in the past, especially in the area of say rice and dairy," he said.